Renewable Energy Certificates in a Nutshell: Turkish Certificate Scheme and Beyond 1 - Onur Uyanusta

Renewable energy certificates (REC) are in circulation for more than 20 years the moment. They had helped many companies to show their "green ambitions" until now, but also there are some allegations that they are just "greenwashing" their carbon footprint. Both sides have valid points strictly speaking, but we must start with a short intro before colliding ideas.

In the context of the matter, electricity can be defined as a homogenous substance. Think of a bunch of electrons flowing positive to negative. Every electron is the same independent from its origin. In sum, when it is on the grid, there is no way to tell that some electrons came from the coal power plant or solar power plant. In the 20th century, when using renewable energy was not an objective, this physical restraint of non-traceable electricity was not a big issue. When the Kyoto Protocol was signed in 1997, and carbon measurement became a hot topic, the demand rose for renewable energy tracking dramatically. This demand wasn't unexpected because more than half of the carbon emissions came from direct energy production or energy-related works.

Naturally, people started to search to put some label on electricity and track it in some way. Some went directly; they built renewable energy power plants (REPP) and fed their enterprises with them directly. Though it was the simplest and most solid answer to prove the REPP's energy, it was not quite economically effective, especially on a large scale. Stable energy flow was also another issue. Then the optimal solution came as giving RECs for renewable energy production. This plan was also a simple one: If you were a renewable producer, you certainly had a meter to follow your energy production. I, the one who has the auditing power, would measure your meter from time. Regarding your production, I would give you the right to obtain a certificate for every 1 MWh you produce if you were willing to pay me the certificate issuing price. After you took this certificate under your name, you could sell it to the traders, customers, retailers, etc. Then the certificates were matched with the electric consumption and canceled. Energy from REPPs also has a mass equivalent depending on the source, so it could be used if the occasion arises in carbon obligations.

Although the process seems simple, REC systems often require auditing and manpower in accordance. Since the market is going more digitalized day-by-day, the auditing is expected to become more automated than ever. Many attempts are currently made to realize that, including implementing blockchain solutions to REC systems. In sum, this plan worked quite well. Twenty years after REC went into action, we see that the EU is leading the REC development by issuing nearly 750 TWh in 2019.

Turkey's story for RECs started at the start of 2020. Though many can think it is late, entering late has some advantages, such as implementing the cutting edge system. EMRA has decided to start the initiative before the obligations, which are expected to come from Carbon Border Tax (CST) and the Paris Agreement. This can be considered as a pre-regulation attempt, which is a rare action coming from regulators. We can expect to see those attempts more often in the future from all of the world's regulators since technological advancements are entering and disrupting the energy markets faster than ever.

Before the new REC attempt, renewable energy had already been certified in some way. In the Renewable Energy Law No: 5346 article 5, renewable energy resource document (aka YEK belgesi) was defined. It pointed out certain properties that a modern REC must have, such as tradeable, trackable, resource disclosing certificates, etc. Due to the past requirements, only resource disclosure was used for feed-in tariff (aka YEKDEM) payments.

EMRA decided that it was time to step in for the other properties of the "YEK belgesi." So a new national REC system was planned under the name of a renewable energy resource guarantee system (aka YEK-G system), which will comply with the international requirements that a REC must-have. This was necessary because energy production licenses are accepted as "YEK belgesi" in the bylaw for feed-in tariff payments. The energy production licenses cannot be traded as modern RECs. Hence, a brand new document definition was necessary under the name of "YEK Belgesi."

By-law for the YEK-G system was prepared under six months of a collaborative effort from all market participants. The system is expected to be running in June 2021. The system dynamics will be explained thoroughly in the following article.

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